Macy’s Inc. announced on Thursday plans to shutter up to 100 stores in early 2017 or as leases expire or operating covenants go stale. Jeff Gennette, company president, stated that the stores slated for closure are cash-flow positive, but most have had steadily declining volume and profitability in recent years.
The company’s announcement indicated that the value of the real estate represented in a store, using San Francisco’s Union Square Men’s Store as an example, versus popularity and profits were determining closure factors. The company is in negotiations to sell the Union Square store for redevelopment, and it is looking at similar scenarios for its “large downtown flagship stores in various cities.” Both stores in Santa Barbara are leased: La Cumbre’s from Macerich, a real estate investment trust, and Paseo Nuevo’s from Pacific Retail Capital Partners, which both manages the mall and has had an ownership interest since 2015 along with Silverpeak Real Estate Partners and JP Morgan Asset Management. Store representatives at both Macy’s in Santa Barbara said they were unable to comment.
The model that Macy’s Inc. is moving toward contemplates a larger emphasis on sales online, supported by brick-and-mortar stores, license agreements on sales floors, and vendor shops, the announcement said. Established in 1858 by Rowland Hussey Macy at 14th and 6th Avenue in Manhattan, Macy’s went public in 1922 and carries a single-letter stock moniker: M. It had fiscal 2015 sales of $27 billion among its 728 Macy’s stores. In the past six years, 90 Macy’s have closed and 13 new ones have opened, according to the announcement. Macy’s also operates Bloomingdales and outlet stores for both department stores: Bloomingdale’s Outlet and Macy’s Backstage.
Closing information will go first to store employees, the company stated, who will be offered positions nearby when possible. Those laid off will be offered severance benefits if eligible.